Wednesday, May 31, 2017

FOR IMMEDIATE RELEASEManufacturing and Theory of Constraints Expert Dr. Lisa Lang Shares Client Success StoryTanya DiSalvo, President of Criterion Tool, shares her story of how her precision machine shop used Velocity Scheduling System to achieve record profits.Green Valley, AZ – November 14, 2012 – “Dr. Lisa” Lang, President of the Science of Business and Theory of Constraints expert, is proud to share one of many client success stories. Tanya DiSalvo is the President of Criterion Tool (founded in 1953) and an active member of both NTMA (National Tooling and Machining Association) and PMPA (Precision Metal Products Association). Tanya has utilized Dr. Lisa’s Velocity Scheduling System at her machine shop to improve on-time delivery and reduce lead times.
Tanya DiSalvo’s case study and success story (written by Mike Touzeau) can be found at https://www.velocityschedulingsystem.com/site/wp-content/uploads/2012/10/Tanya_Success_Story_v5.pdf
Here is an excerpt:
“It’s so different from what we’ve seen in the world of manufacturing that it sounded too good to be true. At first as a team we couldn’t get our arms around it, but Dr. Lisa said she was going to give me my money back if it didn’t work, so we were going to do everything she said.”They liked the homework, but several of her 30 employees, including her dad, who was then consulting and observing as he neared retirement, bet some real cash against her that it wasn’t going to work.“I was pretty sure they thought this was just another flavor of the month. Before VSS we were all frustrated,” she remembers, because they were always trying to manage the “slop,” as she calls it—the jobs that got bogged down and often carried into the next month, with select customers always suffering.Once they saw how the system could facilitate movement of jobs, things started clicking.“As we worked through the Velocity Scheduling process, we got more and more in control. We could focus our resources where we needed them the most. We didn’t have to monitor the jobs, the deadlines, the priorities anymore.”“It was all the same people just changing their focus.”
To learn specifically what Tanya did to improve her machine shop scheduling, watch a 47 minute webinar on “How to Get More Jobs Done Faster” at https://www.velocityschedulingsystem.com/webinar/
“Dr. Lisa” Lang is one of the foremost Theory of Constraints experts in the world and a sought after manufacturing expert having been named the 2012 Manufacturing Trendsetter in the USA Today for her inexpensive and guaranteed Velocity Scheduling System Coaching Program that has dramatically improved performance of well over 100 highly custom job shops and machine shops. She has also appeared in CBS News, The Wall Street Journal, Finance.com, About.com, Gear Technology, CNBC, MoldMaking Technology, The Fabricator, NTMA’s The Record and many others. She is active in helping the reshoring of manufacturing back to the U.S. and in the NTMA, PMA, and AMT communities having helped member companies to reduce their lead-times and improve due date performance. She worked with Dr. Goldratt who is the father of Theory of Constraints and author of the bestselling book, The Goal. Dr Lisa is the President of the Science of Business specializing in increasing profits of highly custom manufacturers by applying Theory of Constraints, Lean and Six Sigma (TLS) to operations with Velocity Scheduling System and to engineering/design with Project Velocity System and to marketing with her Mafia Offer Boot Camp.
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Contact:
Dr Lisa Lang
Science of Business, Inc
DrLisa@ScienceofBusiness.com
keywords:
Dr Lisa Lang, Dr Lisa, Theory of Constraints, Velocity Scheduling System, job shop scheduling, machine shop scheduling, Goldratt, reshoring manufacturing, Success Story, Case Study

Monday, May 29, 2017

Job Shop Scheduling - High mix low volume job shops and machine shops can be quite a challenge to schedule.

Why? Here are just a few of the complex problems and challenges that plague the environment:

Bottlenecks or constraints in job shops can move based on the volume and type of work.

Work is diverse -- typically low volume high mix but a production job may be run on occasion, or prototypes will be in the mix.

Jobs are typically made to order, but there are some job shops that may make a stock part, in addition to, custom parts.

While producing new custom jobs are the norm, some job shops and machine shop will do repair work.

Shops may do some amount of on-site new work or on-site repairs.

Emergencies can be fairly common and can take a fair amount of capacity (2% to 30%) and be very disruptive.

For some shops, customers call and make changes (frequently) - dates, quantity, or change their order completely.

It's common place to have employees which are not cross trained at all or cross trained very little so the skill needed isn't always available.

Shop employees don not always show up for work or on they may not show up on time.

Set-up times can vary and some set-ups can take a substantial amount of time, while others take very little time. And, what's worse, is that both scenarios can occur in the same shop and at the same time.

The high mix low volume nature of custom job shops leads to a mix of jobs with all different quoted leadtimes.

The touch time to complete a job can also vary wildly. The same shop can have very short touch time jobs and at the same time have very long touch time jobs and everything in between.

Due to precision and/or tolerances, certain jobs have to run on particular machines, making scheduling a problem.

And if those weren't problem enough, some jobs have outside processing to be done and some don't. Some have more than one outside process to be and some have none.

The leadtime on necessary outside processes will vary by the process and the vendors do not always deliver when they promised.

Yield rates are not perfect -- they may not be 100% or quality issues can play a role depending on the precision and type of work.

And, regardless of all these problems that can occur in scheduling a job shop and often do, customers still want their job done on time.

Now you know why it's so difficult to schedule a custom job shop. It is the nature of the beast.
There is a solution -- it is called the Velocity Scheduling System. It was developed for highly custom job shops and machine shops where these problems and Murphy not only exist, but thrive.
Velocity Scheduling is NOT software but a visual scheduling system. It is a manual system that includes a visual planning board, as well as, a visual scheduling board. These boards are customized for your specific situation. Given all the complex challenges discussed above, you can imagine how important it is to customize any solution for your particular environment.
To learn more, check out the ebook tab and the webinar tab. The ebook provides more information on the scheduling challenges and the traditional solutions while the 47 minute webinar provides the VSS solution.
Best Wishes,
Dr Lisa
By Dr Lisa Lang
This article is copyrighted by Science of Business, Inc.
Visit our Re-post guidelines.

Job Shop Scheduling Software | Machine Shop Scheduling Software

I'm like you. I invested in job shop scheduling software (we used to own a job shop). Spent hours and hours getting it setup up only to spend more time continually updating the schedule. Why does it seem that the moment I print the schedule it's out of date? And the software itself doesn't lead to an improvement, a little time savings but no real improvement.

Job Shop Scheduling Software - it's NOT working!

There's no question that there is an almost unlimited number of job shop scheduling problems and challenges. And the scheduling modules that are available don't seem to fully address these problems.
To try and solve these problems and challenges, we tend to add more DETAIL. If what we're doing now is not working, we just need to work harder. Right?
We spend more time updating the schedule. We add more information. We update more often. We invest in software or add a module to our ERP systems that provides a way to collect and analyze the data.
But, adding more detail is not the answer.
Here's an excerpt from a job shop scheduling software article on thefabricator.com.

Sources concede that job shop scheduling is just too complex for software to do all the work. “There is always going to be a human element to the decision-making effort,” Lechleitner said. “I think any APS (Advanced Planning and Scheduling software), at its best, will probably get you about 80 percent there.”
Liddell agreed. “The software can do 80 percent of the donkey work, which will let the scheduler do 20 percent of the fine-tuning. We’re not trying to create the perfect schedule. We’ve never seen it work.”
“I have not seen any magical formula,” said Richard Henning, president, Henning Industrial Software, Hudson, Ohio. “You need to monitor the skills people have for specific operations, what machines people are assigned to work on. These are all complex relationships. You still need a human being to help you see the big picture.”

And those guys are job shop scheduling software vendors. But in their defense software just can NOT take into account all the variability that job shops encounter. And yes I know there are some algorithms you can run (and rerun and rerun) that will balance your capacity. But again, it's a continual updating of the schedule.
It really doesn't matter if you're running finite capacity scheduling, infinite capacity scheduling, foward scheduling, or backward scheduling -- it takes constant managing and updating.
I'm not saying that you shouldn't invest in the an ERP package or even a APS package, just realize that if you just do what you're currently doing a little faster, it's likely that your productivity will not increase, your lead-time will not reduce, and your due date performance will not get better. And isn't that the point?

Job Shop Scheduling Software Solution

Velocity Scheduling System (VSS) is NOT software. It is a visual, manual scheduling system that will work with your existing ERP or no ERP. It is designed specifically for high mix low volume custom job shops and machine shops whose constraint can move week to week or even day to day and who suffer from a number of the job shop scheduling problems and challenges.
VSS is implemented during a 14 week coaching program. Each shop is different and the system needs to be customized for your specific shop and challenges -- therefore coaching is extremely important and boxed solutions are not used. Results are realized typically in week 5 but it depends on how fast your team takes action. (more details and our guarantee below is a shorter summary)
We need a list of your jobs including their due date, internal process time estimates, and outside process times (if any). And don't worry if your estimates are not accurate. That's to be expected in a custom job shop-- we don't need more detail! We're using the information to come up with a "priority release order". So as long as they are relative to each other, the order is close enough.
By visually managing the jobs that are currently in process and on your visual scheduling board - Velocity Board, you eliminate the constant re-scheduling.
And the Velocity Board is not like any scheduling board you've ever used. The details of how it works are proprietary, but you get all the specifics in the 14 week coaching program and more importantly we customize it for YOUR custom, complex shop.
A good visual scheduling system will help you to see if you have any issues. Nothing can hide and nothing can fall through the cracks. If a problem arises, you see it and can deal with it. There's no rescheduling to do. There's no one walking around with a schedule in their back pocket -- it's a visual SYSTEM.
Jobs that are not yet in process are on your To Be Released Board in "priority release order" so that you can visually manage your backlog. One thing we like to view visually on our TBR Board is the status of "full kit" on the jobs waiting for their turn to be released.
Another component of Velocity Scheduling System is what we call "Detailed Planning". But detail in this case is much much less. This is where we come up with priority release order (this where we interface with your ERP or whatever you use) that we've already discussed and then we look to see if there are any issues with that release order. For example, if we release in that order might we encounter a constraint? If we release in that order are we likely to meet our due dates? We predict when each job will start and when it will be completed. We do NOT try to predict when each job will be on each machine. That level of detail is very likely to be wrong and cause massive re-scheduling. A macro view of starting and finishing is much more predictable.
The order we implement is shown in the graphic below. But before we get to that we need to make sure that you shop is a good fit. So I recommend you watch the scheduling webinar which will provide more detail on Velocity Scheduling System. At the end of that webinar, I'll explain how we can talk to determine if you shop is a good fit and what results are likely. And if I don't think it would work in your case or your results would not be big enough -- I'll let you know.
THE key measure in Velocity Scheduling System is productivity. The goal is to get more done with the SAME resources (the definition of productivity). And, if you ship more without increasing costs -- your lead-times reduce, your due date performance improves, and of course, you increase profits. All with less chaos and less re-scheduling.
Sincerely,
"Dr Lisa" Lang
P.S. Check out the solution to job shop scheduling software --> How to Get More Jobs Done Faster Webinar!
By Dr Lisa Lang
This article is copyrighted by Science of Business, Inc.
Visit our Re-post guidelines.

Sunday, May 28, 2017

Click the link below to download the free special report for machine shop and job shop owners titled: "The 9 Biggest Challenges to Scheduling YOUR Job Shop and Why Most Schedules are Dead on Arrival!" by Dr Lisa Lang.

Here is the second FREE Special Report on scheduling for custom job shops by Dr Lisa Lang.
This report takes an in-depth look at the differences between conventional scheduling wisdom, "Off the Shelf TOC" (Traditional DBR & Simplified DBR scheduling), and the Velocity Scheduling System.
I think you will find it enlightening. It's something that most TOC consultants don't even understand.
Please leave your comments and questions after reading it.
https://www.VelocitySchedulingSystem.com/ebook2/

www.VelocitySchedulingSystem.com
Thanks for your questions, comments and feedback to the special reports and videos.
Video #3 is in the works so stay tuned for that.
As I stated in one of my first emails, I was looking to get your feedback so I could fine tune our system to make sure it was ready to release. And in the process, I would provide you some free content and longer explanations of how you could put The Goal to work in your shop.
In Video #2, I challenged you with the first actions to take if you really wanted to improve your operations -- and some of you were even brave enough to take the recommended actions!
The next actions are customized for YOU. And this is where the Coaching Program takes over.
So we are now ready to open registration of the Velocity Scheduling System Coaching Program! With this system you will
- increase your due date performance
- decrease your lead-time
- and, increase communication while decreasing chaos
And more importantly you will do this WITHOUT a consultant camped in your conference room and certainly without the expense. We will guide you and your team through the steps to achieve these results -- and provide the coaching necessary to customize it for your situation.
Why is this important now, when most of us have MARKET CONSTRAINTS? For 2 reasons. First to exploit a market constraint you must have your operations in order -- you need to have close to perfect DDP, you need to have shorter lead-times than your competitors, and you need to be able to guarantee these commitments.
And second, if you need to cut people, the system will help you to determine where you can cut and have the least impact on your ability to deliver.
So, if you're ready to take control and tackle your market constraint, it would be my pleasure to share our experience and provide the system and guidance necessary to make it happen!
To register go to: www.VelocitySchedulingSystem.com

In this 30 minute video I give you an overview of what's included in the VSS and how the coaching program will work. Then I interview a VSS Coaching Program client. This client was the LAST to get results during our last coaching program. But wait until you hear the results!
And Ricky discloses an idea he used after cutting WIP but before his Velocity Board was up.
You don't want to miss this!
[embed]http://vimeo.com/13109539[/embed]
Register NOW at http://www.VelocitySchedulingSystem.com
By Dr Lisa Lang

By Dr Lisa Lang
Tanya DiSalvo, President of Criterion Tool & Die, just sent me this email:

Lisa & Brad-
We finished off our fiscal year end 10/31..... could have never turned things around w/out the V V S.!!!!!! We finished the year in the black because 'the board' helped us focus on FINISHING! The last 6 months also saw a serious improvement in on time delivery, and an increase in the volume of orders thru our building. We have accepted a long running project, and feel that the self releasing mechanism of "The Board" has allowed us to tackle this type of work effectively while still serving our job shop type customers. No job gets lost in the shuffle no matter how longs its in the building, and the resources (people) have become utility ball players!
I have included a snapshot since May of our numbers.
Jumped back into Mafia Offer training.... Got the itch to know more!!! THANK YOU!
Tanya DiSalvo
Criterion Tool

And here are some of their key meterics:
[caption id="" align="aligncenter" width="441"] The Velocity Scheduling System helps this machine shop get on time![/caption]
Criterion has almost doubled the dollars out the door. If you ship twice as much and you don't hire anyone or buy any equipment -- what happens to your profits?
Tanya is now working on Criterion's Mafia Offer. Because by implementing the Velocity Scheduling System, they have uncovered capacity. So the next step is to sell that capacity.
If you need to get your operations in order, you can sign up here: www.VelocitySchedulingSystem.com. If registration is closed, you will have the opportunity to get on the waiting list to be notified if there is another session.

30 Job Shops Improve Scheduling

In 2009 we significantly improved the scheduling and operations of 30 custom job shops and machine shops. These 30 shops improved due date performance (DDP) to at least 97%, reduced lead-time by 50%, all while improving communication and reducing chaos. Isn't it time for YOU to do the same?
Here's an email that I was copied on just yesterday. It's from one of my VSS clients to someone he is recommending the course to:

Jose,
This is the best system for Manufacturing that I have encountered. This is our next step in the cables shop and covers the entire value stream.
It is a web based course that you take 2 hours twice a week for a month and the person walks you through your specific implementation and helps you through the problems.
We are currently finishing the training and building the new board.
Trust me I have seen and implemented many JIT, Lean Six Sigma systems in the past and this is the best.
I have copied Dr. Lisa the creator and facilitator of the program. She is top notch. As well I am attaching one of her free reports on how the system compares with other systems.
Sincerely,
Luis Fernandez
Schlumberger
Manufacturing Engineer IPC-Cables

It's amazing what can happen when a team of people participate together and acquire a shared vision.

And did I mention that 3 of the companies participating in group 5 were from multi-BILLION dollar conglomerates?

And 4 of the companies in group 5 were Westinghouse vendors because Westinghouse recommended their vendors sign up?

I just laid out my recommendations, the logic and provided a little motivation. They did all the work.

The next group is starting soon and you can sign up at www.VelocitySchedulingSystem.com. The Velocity Scheduling System Coaching Program is based on Goldratt's Theory of Constraints. So if you ever wanted some guidance putting The Goal (and Drum Buffer Rope) into action, now's the time!

By Dr Lisa Lang We have worked with companies around the globe and the constraint is always the same. It's how we think. In particular, it's how the business owner or leader of the company thinks. Last time, in Part 1, we discussed the efficiency mind-set and how focusing on efficiency can lead you astray. I made the case that efficiency is NOT a precursor to improved performance, but a by-product. In this installment I want to discuss another type of wrong thinking - the allocation mind-set.
You buy the same equipment as your competitors. You hire from the same labor pool. The only difference is how you think. Unfortunately, you and your competitors also think the same way. So you are left to compete in a market where, from your customers' perspective, you're all the same. So they make decisions mostly based on price.
Let me explain some of the common ways our thinking goes wrong and the negative effect this wrong thinking can have on your business.
The allocation mind-set is where we believe that in order to ensure we are going to make a profit, we have to allocate some portion of our overhead to "product cost". The idea is that if every product we sell absorbs some of our costs, then we will know at what point we are making money and we can better ensure that we cover all our costs.
So when we calculate the "gross margin" (GM) of a product it looks something like this:
Selling price: $100
-COGS: -$60
------------------------------
Gross Margin: $40 (also called Gross Profit)
Where COGS (Cost of Goods Sold) typically include raw materials and the direct labor used to create the product or deliver the service. (Some companies may allocate more than direct labor, but this is the most common allocated cost.)
But if you think about it, direct labor really is NOT a variable cost, unless you pay piece rate. And this is true for both manufacturers and service providers (again unless you pay piece rate - which is very rare). You are going to pay your employees this week whether you sell something or not.
It is this allocation of direct labor to COGS that is what I'm referring to as the "allocation mind-set". The amount of direct labor allocated to a product/service is usually based on annual volume assumptions and the estimated time a particular job will take.
This means that the allocation of direct labor costs to a job or opportunity influences your decisions:
· Which jobs/projects you take.
· Which markets you go after.
· Which customers get preferential treatment.
· How much you charge.
So far, you're probably thinking - yeah, that's what we do, what's the problem? The problem is that the allocations you do are based on a volume assumption and time estimates. Both of which we know one thing for sure about - they are wrong. The question is by how much and in which direction.
Not only will the amount you allocate be wrong, more importantly, it can lead you astray. The best way for me to demonstrate that is with an example.
Let's say that you have a customer who wants to give you more business. They are one of your best customers and in exchange for the additional business they want a volume discount. The volume discount is reasonable and something you do all the time. The problem is that the way they want the product delivered along with their low inventory requirements it's going to require you to do 3X as many set ups as you would normally do for that volume.
Using the allocation mind-set you would calculate the gross margin of this new business. And you would allocate the additional setup time to opportunity. Your COGS would include the cost of the additional setups.
Now, let's say that the result is that the gross margin percent is slightly NEGATIVE with these additional setups. What would you do? Pass on the additional business? Take the business but give that customer lower priority and complain about that customer every time you run their job? What decision will you make with this cost allocation mind-set?
Who knows since this isn't a real situation, but before you continue reading, please give it some thought. How do you generally feel about more setups or about lower margin work?
If you're like most people you would probably pass on the business or try to negotiate with your customer to take more products at once so that you could reduce the number of setups you would do. And you may even find yourself saying "the cost of those setups makes this business unattractive for us".Let's challenge our thinking with Theory of Constraints and Throughput Accounting concepts. Let's challenge the allocation mind-set. First, how much throughput would the additional volume generate? Throughput = Sales - Truly Variable Costs. Truly Variable Costs (TVCs) are all the costs you pay as a result of selling one more. Typical TVCs include raw materials, purchase parts, outside services, subcontracted services, freight, and sales commission. The Theory of Constraints definition of TVCs do NOT include direct labor unless you pay piece rate. So when we calculate the "throughput" (T) of a product it looks something like this:
Selling price: $100
-TVCs: -$20
------------------------------
Throughput: $80
Next, determine if you will need to increase your fixed costs (operating expenses) if you take this additional volume? Will you need to hire anyone or buy any equipment? If so, how much?
Let's say we do not need to hire anyone or buy any equipment. And if this is the case, we don't currently have an internal constraint. We most likely have a market constraint.
The way we recommend you think about this decision is by comparing the change in Throughput (ΔT) versus the change in Operating Expense (ΔOE) as a result of this additional business. And if the ΔT is greater than the ΔOE, the difference goes to covering all your operating expenses and helping you make a profit.
The fact is that, in most cases, a setup doesn't cost ANYTHING (or they cost a little raw material to get the machine lined out). They do, however, take time. But it is imperative that you differentiate between cost and time. If additional setups would consume so much capacity that you would need to add equipment or people, then it would be reflected in the change in OE.But to deliver that offer you need to do more setups. But because YOU understand that set-ups do not cost anything you are willing to do it. And your competitors are not! Which means you can make thinking differently pay off by taking market share.
I'm not saying that if ΔT > ΔOE that you must take the business, but I am trying to get you to look at the real situation and understand the real bottom-line effect. Because in this example we would potentially pass on business that would add incremental Throughput and if you do have a market constraint then don't you need more business? Shouldn't you be trying to determine what you would need to offer your market to take market share instead of trying to talk your customer out of doing more setups?
The allocation mind-set has you striving to reduce YOUR setups so that you can reduce YOUR costs. Notice that it's all about you. Not a good place to be if you have a market constraint.
Now imagine that it's not the customer coming to ask you to increase your set-ups, but instead you created a Mafia Offer that better served your customers needs by:
· increasing availability of the right products
· by reducing overall inventory
· by reducing the amount of cash they have tied up in inventory
You can hear an example of such a mafia offer here: http://www.scienceofbusiness.com/free-stuff/free-videos-audios/video-player/videoid/20.aspx
So if you improve your operations by eliminating the efficiency mind-set we talked about in Part 1 and then challenge your thinking about allocations to create a great Mafia Offer - what would happen to your business? How much more money could you make?
The combination of our Velocity Scheduling System Coaching Program (for custom job shops) or Project Velocity System Coaching Program (for your engineering department) with our Mafia Offer Boot Camp will accomplish just that.
In Part 3 we will cover the cost mind-set. If you have questions or comments on Part 2, please click on the "Leave a Comment" link at the top of this post.
Wishing you Success!
Dr Lisa
(c)Copyright Science of Business, Inc. All rights reserved.

By Dr Lisa Lang
You may remember these graphs from some reported results (a testimonial) on job shop scheduling below.
[caption id="" align="aligncenter" width="441"] The Velocity Scheduling System helps this machine shop get on time![/caption]
Well I just got an update from Tanya. Here it is:

SUBJECT: Our One Year Anniversary
“Welp it’s Criterion’s one year anniversary with the VSB (Velocity Scheduling System) and WE STILL love it!
A few major projects went thru our building: new product launch in Oct- Dec, another new product launch currently under way, reduction of staff thru attrition and increase in work, and in most cases we came thru with flying colors.
Attached is our score card. ”

Accenture just released a report in conjunction with the United Nations Global Compact called “A New Era of Sustainability.” The most significant finding was that 93% of the approximately 1,000 CEOs surveyed from across the globe indicated they believe sustainability is important to their companies’ future success.
So if sustainability is important to you, maybe the Velocity Scheduling System Coaching Program is a good fit. The Velocity Scheduling System that Tanya uses is based on the Theory of Constraints Drum Buffer Rope. There are 1000s of success stories dating back to the 80s.
Build -- Capitialize -- Sustain. We agree that sustainability is important. The key is how to achieve it. The answer is simple -- the Velocity Scheduling System Coaching Program.

This article in the USAToday on reshoring manufacturing back to the US is interesting and not at all surprising.
Regarding this part of the article:
"Products that are labor-intensive and churned out in high volumes, such as apparel, textiles and TVs, will likely continue to be made overseas. So will those that are relatively inexpensive to ship but high-priced, such as laptops and cellphones, Ellis says. Goods are increasingly being made near customers, a trend that's driving U.S. makers to build factories in fast-growing China."
I did an RMTMA (Rocky Mountion Tooling and Machining Association) dinner presentation several years ago titled "China, India, Tawain ... Oh My!" and my contention then was (and still is) that the more flexible and custom you are as a manufacturer the more likely your work will stay here.
The faster you can get highly custom work through your shop -- the more secure your future is. I suggest taking a look at the work you hate to do -- and figure out a way to make it easier, start loving it, and go get more of it because your competition hates it too!
The shops participating in our Velocity Scheduling System program are seeing their lead-times cut by more than 50%. If they can have something ready to ship while everyone else is still complaining about it -- they are going to be extremely successful in the long run.

The Tax Extenders Package signed by President Obama on December 17th, 2010 calls for a two year extension, retroactive to 1/1/10 and through 12/31/11 for the R&D Tax Credit.
The definition of Research and Development (R&D) is much broader than people realize. Activities and costs associated with developing and/or improving a product or process can potentially generate R&D Tax Credits.
This means that your tuition for the Velocity Scheduling System Coaching Program may be covered -- check with your accountant.
So learn a new way to run and schedule your shop, get on-time, get happy customers, get more customers --- and then get a tax credit! How cool is that!
And even if, for some reason, it doesn't apply to you. Velocity Scheduing System Coaching Program is so reasonably priced it may not be worth the effort to look for a writeoff or funding.
Now, the only other question you may have is --- Yes, but will Velocity Scheduling System work for me? Will it work in my my shop with our unique situations and challenges?
I don't know, because even though over a hundred highly custom job shops have had fantastic success, that doesn't mean you will. But I'm willing to investigate it with you. So if you'd like a private strategy session to discuss your company, your unique scheduling challenges and how/if our scheduling solution will work for you, you can sign up here, there's no charge:

You'll need to enter your name and phone number so that we can call you to schedule a time to talk. I am personally doing these sessions and we will be going deep into YOUR scheduling challenges. I will hold nothing back and give you my best advice, even if it is that you should NOT sign up for VSS. Time slots are limited SO SIGN UP NOW!
Dr Lisa
President, Science of Business

P.P.S. And some states have their own R&D Tax Credit too. I know Ohio has one, so check with your accountant on that too. But don't spend too much time, VSS typically pays back in a couple weeks. It's based on the Theory of Constraints Simplified Drum Buffer Rope, and it works FAST!

The Secret to Getting On Time and Reducing Leadtimes

Article From: MoldMaking Technology, Dr. Lisa Lang, President from Science of Business
Job scheduling plays a big role in our on-time delivery performance and leadtime, which determines our competitive position within our industry. This is particularly true as competition has gotten more fierce in recent years. Only the best shops have survived. And those shops have very good quality and lead the pack in expertise. This means that scheduling is where and how you can really stand out. But there’s no question that scheduling has its challenges; and, every time we encounter a challenge our schedule is out of date and requires an update.
We spend a lot of time updating the schedule. Following are just a few of the common scheduling challenges that cause us to continually update the schedule:

Clients change their mind

Vendors aren’t always reliable

Mix can vary wildly and so our constraint moves

Employees do not always have the right skill and their discipline is lacking

Processes are not reliable

Machines and tools break

Quality is not near perfect

Data is not readily available nor accurate nor communicated

Communication between silos is difficult

Mold shops usually don’t have the luxury of making the same parts over and over again. The mix of work and amount of repair/emergency work a shop has can change so dramatically week to week that their bottlenecks can move, making on-time delivery a real challenge.
Most shops have tried a number of strategies to improve their on-time delivery and reduce leadtimes—e.g., updated ERP or scheduling software, used some lean techniques or hired an expeditor—but, the results are usually not substantial. And, that’s because typical solutions address the various symptoms, but don’t address the root cause. So how do you address the root cause?
How can you dramatically improve your scheduling?

The Secret Solution

The secret is to stop focusing on efficiency. When you are willing to do that, and put a more effective scheduling system in place, you create a buffer to better absorb all those sources of variability listed above. If you are willing to give this strategy a try and your competitors continue to cling to efficiency, you can create an incredible competitive advantage.
So, what does it mean to be efficient? The definition from Dictionary.com is “performing or functioning in the best possible manner with the least waste of time and effort.” Money and cost should be added to that definition. One of the ways we typically apply efficiency in a shop is by keeping all our equipment and/or people busy so that we don’t waste any capacity and have the highest possible utilization. But to keep our key resources busy they all must have a job to work on, and to increase the likelihood that all resources have work, we typically make all jobs in house available to be worked on. “Available to be worked on” means included in our work-in-process.
This max’s out your work-in-process and increases the pile of work at every work center. That way all key resources have a very high probability of having something to work on. This is particularly relevant in shops where the mix of work can change from week to week. That’s one of the things we do in the name of efficiency.
According to Little’s Law there is a direct correlation between the amount of work-in-process we have and our leadtime. The higher our work-in-process, the longer our leadtimes. Figure 1 is an illustration showing the relationship between work-in-process and leadtime.

The more jobs that wait for their turn, the longer the average queuing time, leading to longer production leadtimes. Example 1 has the most work-in-process and longest leadtime. And, conversely, Example 3 has the least work-in-process and the shortest leadtime. So, as you increase work-in-process, you are also increasing your leadtime—not to mention the amount of cash you have tied up in raw materials. But wait, there’s more—on-time delivery decreases. The diagram does not include the effect of variability. But if it did, it would show that the variability of production leadtime is increased as the queue grows. So the effect of high work-in-process just gets more dramatic the more variability you have. This directly reduces the on-time delivery because it is more difficult to predict the exact production leadtime and to confirm orders accordingly.
High work-in-process can also have an impact on quality. Many production failures occur early in the routing, but are detected much later in the production process (usually at final inspection). If work-in-process is high, the average leadtime is also high, causing a long lag time between the production steps and the final inspection. That means the final inspection step occurs a long time after the step that caused the failure. And because so much time has passed, it can be difficult to determine and correct the root cause of the quality problem, making improvement very difficult. Thus, the higher the work-in-process, the harder it is to detect and correct quality problems.
All of this leads to why you should stop focusing on efficiency. As you stop focusing on efficiency and reduce work-in-process, here’s what happens: Queue time reduces Leadtime reduces Leadtime predictability increases On-time delivery increases Quality increases Cash flow increases
As a result of these improvements, your production leadtime becomes much shorter (if you do it right) than your quoted leadtime. This difference can be used in two ways. First, it creates a buffer allowing you to absorb a fair amount of variability and further enhancing your on-time delivery performance. And secondly, the difference is so big that you can also afford to reduce the quoted leadtime to customers.

Summary

The combination of a shorter quoted leadtime and 99-percent + due date performance creates a competitive advantage. Understanding that all of this is easier said than done, but it’s not physically hard to do, it is just mentally challenging because we don’t have intuition around this approach. Take some time to digest the negative effects an efficiency focus can have on your shop scheduling.
LearnMore: Check out Dr Lisa’s 47 minute webinar How to Get More Jobs Done Faster at www.velocitySchedulingSystem.com/webinar.
Contributor: “Dr. Lisa” Lang is one of the foremost Theory of Constraints experts in the world and a sought after manufacturing expert having been named the 2012 Manufacturing Trendsetter in the USA Today for her inexpensive and guaranteed Velocity Scheduling System Coaching Program that has dramatically improved performance of well over 100 highly custom job shops and machine shops. She has also appeared in CBS News, The Wall Street Journal, Finance.com, About.com, NY Daily News, CNBC, The Boston Globe, The Miami Herald, and others. She is active in helping reshore manufacturing back to the U.S. and in the NTMA, PMA, and AMT communities having helped member companies to reduce their lead-times and improve due date performance. She worked with Dr. Goldratt who is the father of Theory of Constraints and author of the bestselling book, The Goal. Dr Lisa is the President of the Science of Business specializing in increasing profits of highly custom manufacturers by applying Theory of Constraints, Lean and Six Sigma to operations with Velocity Scheduling System and to engineering/design with Project Velocity System and to marketing with her Mafia Offer Boot Camp.
Here's the link to the article in MoldMaking Technology Magazine: http://www.moldmakingtechnology.com/articles/the-secret-to-getting-on-time-and-reducing-leadtimes.

Robert Peuterbaugh, President of Joint Production Technology, shares his story of how the Velocity Scheduling System is helping his company to see increased production and profits.Green Valley, AZ – December 29, 2012 – “Dr. Lisa” Lang, President of the Science of Business and Theory of Constraints expert, is proud to share another client job shop scheduling success story. Robert Peuterbaugh, president of Joint Production Technology (JPT) in Macomb, Michigan. Robert has utilized Dr. Lisa’s Velocity Scheduling System to improve productivity at his facility.
The Velocity Scheduling System is based on Theory of Constraints, but it has been adapted for highly custom job shops and machine shops whose constraint can move week-to-week or day-to-day.
Robert Peuterbaugh’s case study and success story (written by Mike Touzeau) can be found at https://www.velocityschedulingsystem.com/site/wp-content/uploads/2012/12/VSS-success-1-v4.pdf
Here is an excerpt:

Providing high tech innovations for precision cutting, boring, and other applicable manufacturing functions for such big outfits as GM, Ford, TRW, and many others here and abroad, Peuterbaugh knows his operation inside out. Battling the downturn like everyone else, this seasoned leader has always investigated long-term remedies rather than groping for gimmicks, so he began to search for solutions.“As things got worse, I looked at what would make things better,” he said.” I had followed Dr. Lisa’s emails for two years before signing up.”He knew it would be important to improve productivity, so having read much of what Dr. Lisa had written on Velocity Scheduling System (VSS), he took the plunge, knowing many others wouldn’t.“Sometimes you say that we’re good at what we do, so why change?”“When I saw all the reasons,” he put it, “it all fit. That’s what got me to talk to her.”JPT HAS SHOWN A 64 % INCREASE IN SHIPPED $.He estimates between a 25 and 35 percent profit increase “directly attributable,” he says, to the changes his team instituted after starting the VSS program in February. Once the process started working, he recalls, his team stood in awe at the seamless flow, shipping each day with customers getting something every day.“They just could not believe it.”

And another:

Robert Peuterbaugh’s story is probably not unlike your own. You worked hard to build a solid reputation with your customers. You want American manufacturing to be great, and though you’re a successful small or large operation, scheduling is still always an issue.VSS is a system that creates a continuous flow in your operation so all your employees share in knowing what needs to be done and when.

A member of many manufacturing organizations, Robert Peuterbaugh works with local schools to promote manufacturing career education, and serves on the Board of Directors for Tooling, Manufacturing & Technologies Association (TMTA).
To learn specifically what Robert did to improve Joint Production Technology, watch a 47-minute webinar on “How to Get More Jobs Done Faster” at https://www.VelocitySchedulingSystem.com/webinar/ or read the “9 Challenges to Scheduling Your Job Shop” ebook at https://www.VelocitySchedulingSystem.com/ebook/.
“Dr. Lisa” Lang is one of the foremost Theory of Constraints experts in the world and a sought after manufacturing expert having been named the 2012 Manufacturing Trendsetter in the USA Today for her inexpensive and guaranteed Velocity Scheduling System Coaching Program that has dramatically improved performance of well over 100 highly custom job shops and machine shops. She has also appeared in CBS News, The Wall Street Journal, Finance.com, About.com, Gear Technology, CNBC, MoldMaking Technology, The Fabricator, NTMA’s The Record and many others. She is active in helping the reshoring of manufacturing back to the U.S. and in the NTMA, PMA, and AMT communities having helped member companies to reduce their lead-times and improve due date performance. She worked with Dr. Goldratt who is the father of Theory of Constraints and author of the bestselling book, The Goal. Dr Lisa is the President of the Science of Business specializing in increasing profits of highly custom manufacturers by applying Theory of Constraints, Lean and Six Sigma (TLS) to operations with Velocity Scheduling System and to engineering/design with Project Velocity System and to marketing with her Mafia Offer Boot Camp.
###
Contact:
Dr Lisa Lang
Science of Business, Inc
DrLisa@ScienceofBusiness.com
keywords:
Dr Lisa Lang, Dr Lisa, Theory of Constraints, Velocity Scheduling System, job shop scheduling, machine shop scheduling, Goldratt, reshoring manufacturing, Success Story, Case Study, TMTA, Michigan Manufacturer
Links:
http://prlog.org/12050614http://www.pressnewsroom.com/?p=18180
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This is the second in the series of conversations.
Brad: “Just what should a highly custom job shop or machine shop company set as a profitability goal? What is reasonable? How high is up?”
Dr. Lisa: “I’ll give you Dr Eliyahu Goldratt’s answer and then I give my more direct answer. Dr. Goldratt stated that profitability goal of the business should be a level of return on sales that top management of a company agrees is definitely impossible to attain.”
Dr. Lisa: “For example, if everyone agrees that 5% Return of Sales is definitely possible, that is too low of a goal. If everyone feels the same about 6%, 7%, 8%, and 9%, they those levels are also too low of a goal. But if everyone agrees that 10% is not achievable, that then becomes the goal.”
Brad: “That would be an interesting exercise for any CEO to do with his or her top management team.”
Dr Lisa: “My answer: How high is up is going to be dependent on 1) what percent your Truly Variable Costs (TVCs) are of sales. And 2) how much capacity you can undercover – meaning how much productivity you can gain with the same people and resources.”
Dr Lisa: Knowing both of these numbers (better to be approximately right, than precisely wrong), will allow you to arrive at a very feasible goal and yet one that most will agree is not attainable based on previous experience.”
Dr Lisa: Using the same example from our last conversation, I’ve added the Return on Sales:

We’ve gone from 0% Return on Sales to 8.3% Return on Sales by being able to sell the 20% productivity gain that was achieved.
Brad: “Many job shops and machine shops that we work with have 20 to 35% TVCs (which typically includes raw materials, outside services, and sales commission if any). Some more some less, but this is common. When I initially analyze the financials of a company, I’m looking for the actions and implementation steps required to bring the company to reliably make a 20% Return on Sales month in and month out, year in and year out.”
Dr. Lisa: “Ha! Be careful, you’ll scare some business owners with that goal. He or she will definitely think that goal is unattainable!”
Brad: “A small business making 20% Return on Sales is a lot more fun to run than a larger business barely managing to reach breakeven.”
Dr. Lisa: “For sure. A company with sales of $2.5 million and a 20% Return on Sales has $500,000 of net income. And so does a company with $25 million of sales with a measly 2% Return on Sales”.
Brad: “Now the nifty thing is that TOC ‘silver bullets’ can be used with that same company with $25 million in sales to bring them to achieve a 20% Return on Sales – a jump from $500,000 to $5 million of net profit.”
Dr. Lisa: “Yes, no wonder that Merger & Acquisition and Turnaround Management Professionals are showing a lot of interest in TOC.”
Brad: “Okay, so let’s discuss more about how this fantastic improvement just might be possible…”
To be continued.
Best Wishes,
Dr Lisa and Brad Stillahn
P.S. To ask questions or leave a comment go below this post.
P.P.S. To find out more about improving productivity in highly custom job shops and machine shops, take a tour around this site. You'll want to check out the job shop scheduling ebook and the webinar.
P. P.P.S. If you have plenty of capacity, but can’t sell it, visit www.MafiaOffers.com.
By Dr Lisa Lang and Brad Stillahn
This article is copyrighted by Science of Business, Inc.
Visit our Re-post guidelines.

Maximizing Profitability the TOC Way #5

This is the fifth in the series of conversations.
Brad: “Let’s talk about job shop strategy. After all, it’s that time of year again.”
Dr. Lisa: “Yes, in the big companies you and I used to work for, the budgeting process starts early and continue for weeks and weeks – almost interminably.”
Brad: “In many companies, including the small -medium job shops that we work with the budgeting process passes for ‘Strategic Planning’. I seem to remember Eli disdainfully calling that ‘Strategic Bull-(something)’.”
Dr Lisa: “My experience matches Eli’s assessment. A lot of BS and little that’s really clear and actionable.”
Brad: “For sure! Having a budget that shows sales increasing by 25% does not mean that the business owner has any idea of exactly HOW that increase will be realized.”
Dr Lisa: “Yes, and I guess that’s my challenge to our readers – how EXACTLY are you going to make the budget that you want to be reality – actually reality!”
Brad: “That’s a really good and necessary challenge – so what guidance or words of advice do you have?”
Dr Lisa: “OK, let’s start easy. “
Brad: “Soooooo, you’re not starting with the Theory of Constraints Strategy and Tactic Trees?”
Dr Lisa: “Correct. Let’s start by stating the objective. What do you want to achieve next year? Be specific and be careful.”
Brad: “What do you mean by be careful?”
Dr Lisa: “I’ll explain with an example. If you state that you want to increase sales by 25% realize that that could happen and you make less profit.”
Brad: “Good point. So what is an objective?”
Dr Lisa: “Objectives are states of being as opposed to actions. What particular desired effect do you want? And the top objective is called The Goal.”
Brad: “Okay, so a business owner states their top level objective, then what?”
DrLisa: “Answer this question: What’s keeping you from reaching this goal? These are obstacles. Once you have the list of obstacles, you can convert each one to an objective.
Here are a couple questions to help you do that 1) What objective, if met, would overcome the obstacle? 2) What state(s) or condition(s) will need to been in place to overcome the obstacle?
Now write your goal at the top of a blank sheet of paper. Then ask – in order to achieve this goal, I must first achieve …. Put the objective(s) at the top which are closest in time to achieving your goal and work your way down the page. After you have the first objective(s) listed then asked for each of those – In order to achieve that, I must first … And so on, until you have placed all the objectives (and probably discovered a few more). The objectives at the bottom would be the first ones you would start working on.
This process is creating a PRT (that’s Goldratt Theory of Constraints speak for Pre-Requisite Tree). This map of objectives becomes your compass, your implementation plan. You follow this compass, this path, until you have learned something that changes your direction or until an opportunity comes along that allows you to skip several levels or is just better that what your were planning.”
Brad: “And if job shop owners go deep enough in this process, they’ll eventually reach a point where they know exactly how to create that state of being or condition.”
Dr Lisa: “Exactly. But if they don’t, they now know what they don’t know.”
To be continued.
Best Wishes,
Dr Lisa and Brad Stillahn
P.S. To find out more about improving productivity in highly custom job shops and machine shops, visit check out the How to Get More Jobs Done Faster webinar or the 9 Challenges ebook.
By Dr Lisa Lang and Brad Stillahn
This article is copyrighted by Science of Business, Inc.
Visit our Re-post guidelines.

"We have reduced the time that it takes for a job to go through the shop. It helped us get control of the schedule, by reducing the scramble of jobs in the shop. Now we do them in order and everyone in the company knows when to expect a job to be worked on and ready to ship." Steve, WI.

If you browse the various VSS testimonials, case studies, and results that custom job shops have reported you'll discover that none of the VSS clients are making widgets. None of these shops are doing high volume work of the same widgets over and over. One thing that VSS clients have in common is that they do NOT produce the same things over and over again. While some jobs, may on occasion, repeat for some of them (or they may make a few things to stock), others don't do any repeat work at all.
Job shop scheduling in a custom manufacturing shop is a challenge, to say the least! But it is this environment that Velocity Scheduling System was developed for.
You'll also notice that in some of the testimonials the specific shop is NOT identified. Why? Well, Steve in WI and many others don't want their competitors to know how they've managed to gain a competitive advantage. How is it that they can get more jobs done faster with the same people and resources? How is it that they've improved on time delivery? How are they more cash flush and more profitable?
To get the results that Steve got or that any of our clients have gotten, you don't need any job shop scheduling software. VSS is NOT software. It is a manual, visual scheduling system. It will work with any ERP software you may use, no ERP, QuickBooks, Excel or whatever software your using now.

In an interview with Amazon CEO Jeff Bezo, Jon Fortt for CNBC reported:

This summer he (Amazon CEO Jeff Bezo) spent time at Lab126, a Silicon Valley outpost about a mile from Apple headquarters where Amazon engineers hash out hardware designs. And he also hosted three all-day book clubs with Amazon's top executives, capped by nice dinners at the end. Bezos said he used the books as frameworks for sketching out the future of the company.
Which books? Bezos was kind enough to share the titles.

The Goal was originally published in 1984 but is still very relevant today. And, as you likely know, it take place in a machine shop. Many job shops and machine shops use The Goal as their Bible. The only problem is that most have no idea how to apply it to their unique shop.
Well, I have good news. If you own or manage a highly custom job shop or machine shop and want to apply what you read in The Goal to YOUR shop, you can do that with expert guidance very inexpensively. Just check out the Velocity Scheduling System (VSS) Coaching Program.
VSS is NOT software but a visual manual scheduling system developed specifically for highly custom job shops and machine shops which are typically low volume high mix environments where the constraint can move week to week or even day to day.
Who's the expert that would guide you? Well that's Dr Lisa Lang. She is one of the foremost Theory of Constraints experts who has worked with Dr Goldratt and specializes in applying Theory of Constraints to highly custom job shops and machine shops.
Check out Velocity Scheduling System here: www.VelocitySchedulingSystem.com When you're there check out the free webinar called "How to Get More Jobs Done Faster". You'll be glad you did!

Thursday, May 25, 2017

Theory of Constraints Drum Buffer Rope

Drum Buffer Rope (DBR) was developed by Eliyahu M. Goldratt (Eli Goldratt), the father of Theory of Constraints. His book The Goal tells a story of a plant manager applying the drum buffer rope concepts.

The drum is the constraint.

The resource that is limiting your output. Most shops typically only have one constraint at any point in time, but the issue is that for many custom job shops and machine shops the constraint can move as the mix changes.
A constraint is any resources that had demand greater than it's available capacity. Any time lost on the constraint is output lost by the entire system. Increasing output at the constraint, increases overall output.
Improving non-constraints has no effect on overall output. This is why measuring utilization everywhere makes no sense. Trying to 100% utilize non-constraints just results in too much WIP and the many issue associated with that.

The buffer is measured in time.

It's the amount of work expressed in time (like days worth) prior to the constraint. We control this amount of work with the rope.
By having a buffer of work in front of the constraint, we can ensure the constraint does not run out of work. The constraint is the only place where 100% utilization is a good thing!
The buffer's job is to absorb variability. In traditional Drum Buffer Rope there are 2 buffers - one for the constraint and a shipping buffer. The one before the constraints is there to protect the constraint and the shipping buffer protects the due date.
Simplified Drum Buffer Rope just has a shipping buffer. Drum is the same.
Any buffers are divided into 3 zones - red, yellow, green. If the buffer is red we find out why. The buffer is sized so that it turns red about 5% of the time. For continuous improvement we track the whys so that we can reduce or eliminate our biggest disruptions to flow. These improvements to flow lead to less variability and needing less buffer!

The rope is how we control the release of new work.

The idea is that if the constraint sets the pace, the drum beat, for the entire operation, then we should only release work at the rate that the constraint can consume it.
If we release work faster than the constraint can consume it, then WIP (work in process) piles up and bad things begin to happen. (See Little's Law.)
That's a brief Theory of Constraints summary of Drum Buffer Rope. The real challenge is figuring out how to make it work in YOUR shop.
The plant in The Goal is a machine shop. It's not the most complex of cases, but it is a machine shop.

Theory of Constraints Goldratt

Velocity Scheduling System was developed for the tough cases:

For the custom job shops and machine shops that run high mix and low volume work or prototypes.

For the shops where the constraint or bottleneck moves based on the mix of work.

For the shops that may not run many jobs twice but can also have a production job to fit in with everything else.

For the shops that do repairs (in house or on-site) or emergency work.

For the shops that don't have perfect employee or vendor performance.

For the shops who don't have perfectly cross trained employees, but have jobs that require a particular machine.

For the shops that produce a wide range of custom parts or products that have a wide range of lead-times, set-up times and outside processes.

For the shops that may not have 100% quality performance and or yields that are less than 100%.

And, for the shops who have customers call and change quantities, dates or both.